CGS-CIMB has maintained its “buy” call on Grand Venture Technology with a raised target price of 36 cents from 26 cents previously on the back of stronger 1H20 performance.
Analysts William Tng and Darren Ong noted that the company’s revenue and net profit at $26.9 million and $2.2 million respectively, came in above their expectations, at 65% of their full-year forecasts.
No interim dividend was declared.
Due to the disruptions to the supply chain from the Covid-19 pandemic, gross profit margin in 1H20 fell to 29.8% versus 39.2% in 1H19.
However, the analysts note that the group has not experienced any push-back or order cancellation of order due to the Covid-19 outbreak. The group also assured that it will monitor its cash flow carefully, given the pandemic and the US-China trade war.
It also obtained certification for ISO 13485:2016, an internationally certified quality management system specific to the medical devices industry, to cater to growing customer demand in this sector.
As such, both Tng and Ong raise their revenue forecasts with the normalisation of the supply chain. They have also raised their FY20-22 earnings per share by (EPS) 25.7-42.0%.
As at 10.41 am, shares of Grand Venture were trading flat at 26 cents, with a FY20 price-to-book ratio of 1.77.
